What I’m Watching This Week – 31 December 2018

The tech-heavy Nasdaq had been the only benchmark index to have exceeded its 2017 closing value. That is no longer the case, as an 8.36% drop last week put the Nasdaq more than 8.0% below its value at the end of last year and firmly in bear market territory. Investors saw the potential of a federal government shutdown and an implied warning from the Federal Reserve that the economy may be slowing as reason to seek shelter from stocks. Besides the Nasdaq, each of the other benchmark indexes listed here suffered large weekly losses, led by the small caps of the Russell 2000, followed by the large caps of the S&P 500 and the Dow. The Global Dow fell “only” 4.86% and is over 13% below its 2017 year-end value.

Oil prices plummeted last week, closing at $45.42 per barrel by late Friday, down from the prior week’s closing price of $51.16 per barrel. The price of gold (COMEX) increased last week, closing at $1,259.10 by last Friday evening, up from the prior week’s price of $1,242.20. The national average retail regular gasoline price was $2.369 per gallon on December 17, 2018, $0.052 lower than the prior week’s price and $0.081 less than a year ago.

Market/Index

2017 Close

Prior Week

As of 12/28

Weekly Change

YTD Change

DJIA

24719.22

22445.37

-6.87%

-9.20%

Nasdaq

6903.39

6332.99

-8.36%

-8.26%

S&P 500

2673.61

2416.62

-7.05%

-9.61%

Russell 2000

1535.51

1292.09

-8.42%

-15.85%

Global Dow

3085.41

2676.76

-4.86%

-13.24%

Fed. Funds target rate

1.25%-1.50%

2.25%-2.50%

2.25%-2.50%

25 bps

100 bps

10-year Treasuries

2.41%

2.78%

2.78%

-11 bps

37 bps

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Economic Headlines

Due to the government shutdown, economic reports, such as the latest reports on international trade in goods and new home sales are unavailable as of the release of this report. If and when that information comes available it will be included in the corresponding Market Week report.

For the week ended December 22, there were 216,000 new claims for unemployment insurance, a decrease of 1,000 from the previous week’s level, which was revised up by 3,000. According to the Department of Labor, the advance rate for insured unemployment claims remained at 1.2% for the week ended December 15. The advance number of those receiving unemployment insurance benefits during the week ended December 15 was 1,701,000, a decrease of 4,000 from the prior week’s level, which was revised up 17,000.

Eye on the Week Ahead

Hopefully, the first week of the new year will bring some encouragement to investors who have seen stocks drop precipitously over the past several weeks. On the economic front, the employment figures for December are out at the end of the week. New hirings have dipped some over the last few months, although wages have increased overall.